Not long ago the Government of the Russian Federation has finally approved the Strategy of development of housing and public utilities until 2020 (Strategy). We remind that in the course of public discussions the draft of this document was exposed to harsh criticism. It is worth noting that a number of suggestions of experts were reflected in the final version of the document. In particular, the business community has managed to ensure the Strategy to include the idea of determination of a house as a real estate and home ownership as a single territorial complex with the adjacent territory. The need for association of management organizations was also taken into account. The issues relating to creation of Condominium Partnerships with 100-percent membership of all owners were amended. These positions were actively defended by the Committee on entrepreneurship in housing and public utilities, a member of which the magazine "Kommunalschik" is. "Implementation of the Strategy will allow to increase the comfort of living conditions, will contribute to the modernization of Housing and Public Utilities subjects, the transition to the principle of using the most efficient technologies, ensuring availability of multi-family buildings for people with disabilities and other people with reduced mobility ", - said the Head of the Ministry of Construction of Russia Mikhail Men. But despite all the amendments made to the Strategy due to the efforts of an expert community professionals still have questions addressed to it". The magazine “Kommunalschik" addressed Dmitry Gordeev, the Leading Legal Advisor for the Urban Economy Department of the Institute for Urban Economics with a request to review the final version of this document. So we will introduce him to the reader.
Keywords: Strategy of Housing and Public Utilities Development, multi-family building, owner, management organization, licensing, Condominium Partnerships, meeting of owners, administrative control.
Crackdown?
By the Decree of the Government of the Russian Federation dated from 26 January 2016 No. 80-p there was approved a Strategy of development of housing and public utilities till 2020. In addition to numerous observations and descriptions of the decisions already taken the Strategy also contains the wording of the alterations that the Ministry of Construction and the Government plan to do in the housing and public utilities sectors up to 2020. It should immediately be noted that a more distant planning border is outlined in the Strategy. The Strategy is the basis for development of the Strategy of Housing and Public Utilities development till 2030. When will it get ready? Most likely in 2019-2020, if nothing changes.
It seems to me that we should not overestimate the Strategy. It is a declarative document. But
its development will include an implementation plan, which should list both actions of various participants of relations in the Housing and Public Utilities (primarily, of course, actions of public authorities) and also the drafts of normative legal and methodological acts, which shall ensure the achievement of the targets intended the Strategy.
The following issues are highlighted as the main directions of the state policy and statutory regulation in Housing and Public Utilities in the Strategy, in particular:
• management of multi-family buildings;
• overhaul of the common property in multi-family buildings;
• resettlement of condemned buildings;
• regulated activities in heating, hot and cold water supply, drainage and treatment of municipal solid waste.
Overall, housing and public utilities components of the Strategy are balanced. Thereat provisions of the Strategy apply to the spheres of electricity and gas supply in respect of ensuring the quality of public utilities resources (services) on power and gas supply, development of energy conservation and increase of energy efficiency in these areas. Other issues on electricity and gas supply development are regulated by the Energy Strategy of Russia for the period up to 2030.
The key measures for implementation of the Strategy include:
- Formation of active and responsible owners of premises in multi-family buildings who have all the rights to make decisions about their house and real possibilities to exercise these rights, as well as a certain level of responsibility for the decisions taken.
2. Development of entrepreneurship, strengthening the competitive environment and attraction of private investments in the area of housing and public utilities.
3. Enhancement of the system of relationships between the owners of premises in multi-family buildings, managing organizations and resources supply organizations.
4. Improving the energy efficiency of the industry.
I liked that the Strategy states that the main task of the public authorities in the area of housing and public utilities is to create a system of statutory regulation to ensure the effective functioning and sustainable development of housing and public utilities, which also provides reduction of administrative procedures, prevention of corruption. The question is how equally efficiency is understood by authorities, business and consumers, how adequate the regulation will be. In order to reduce administrative procedures it is necessary firstly to stop their production. And this is a trend of the recent years. It manifests itself both in implementation of the regional operator model of overhaul and also in implementation of the State Information System of Housing and Public Utilities and other reporting systems, in licensing. Corruptogenicity of licensing procedures and the state housing supervision is resulted from exorbitant fines, possible leeway of corrective actions taken by their results of influence of inspectors on supervised entities and individuals. And how does the proposal "to set additional requirements for management organizations (requirements to the statutory capital, the material and technical facilities, financial status, etc.), including their inclusion in the list of licensing requirements” correspond to the declared thesis? This is a crackdown and the road to a restriction of competition, government intervention into entrepreneurship, a way to consolidation of management organizations, displacement of small and medium-sized businesses and individual entrepreneurs. Such proposals are harmful.
Although it is late, but I would suggest to set a task in the Strategy to stop within 5 years the state’s attitude towards Housing and Public Utilities as to a branch which requires the existence of state and municipal controlling authorities in the housing and public utilities area, as to a sector of national economy. To stop such control at all. Such a situation is, for example, in advanced European countries. But this goal will not be set by the authorities themselves. By Parkinson’s law the scope of work expands to the extent necessary so as to fill the time available for its completion. The law is based on two facts:
1. A senior official aims to increase the number of subordinates, but not rivals.
2. Senior officials create work for each other.
Therefore, there exist all grounds to doubt that the task of reducing the administrative influence on management organizations, Condominium Partnerships, Housing Associations, specialized and public utility resources supply organizations will be performed. On the contrary, I predict strengthening of this impact. The grounding will be found. Let us remember it in 2020. We will monitor the publications of the Strategy implementation monitoring in the annual reports of the Russian Ministry of Construction to the Government.
Bringing into focus
Since there are few concrete measures in the Strategy, so we will analyze general wordings.
Management of multi-family buildings stipulates:
1. Provision of professional management of multi-family buildings, i.e. of managing organizations that have a license to carry out business activities in multi-family buildings management. So in the next 5 years it is planned to save licensing. Qualification examinations do not make multi-family buildings management to be professional. Licensing is weakly correlated with reduction of the administration. This is restriction of business and, of course, non-strengthening of competitive environment that the Strategy beautifully speaks about. It is not an achievement, but a strong pullback from the conceptual provisions of the Housing Code of the Russian Federation. The way of solving the problem of increasing of quality of multi-family buildings management proposed by the Strategy is doubtful.
2. Creation of conditions for increasing the activity and responsibility of premises owners in multi-family buildings through development of forms of citizens' self-government in the Housing and Public Utilities sector, and primarily such as councils of multi-family buildings, condominium partnerships. We also need to create conditions for increasing the activity of the owners and development of forms. The question is how? The Strategy does not provide any answer. It is said that within the framework of the Strategy implementation there will be prepared proposals on improvement of legal regulation of activity of associations of premises owners in multi-family buildings (Condominium Partnerships, Housing Associations). It is necessary to solve the problem of the two statuses of owners in multi-family buildings (members and non-members of the condominium), it is necessary to stop understanding the condominium partnership as partnership of members. A partnership should unite all the owners of the premises in a particular house. To be more correct the owners have already merged and this union is a partnership. But we are not talking about how to establish a wholly-owned membership. The Constitutional Court amended this in 1998. It's about reincarnation of the concept of "Condominium Partnership" without violating the CC decision No. 10-p. It is necessary to create regulation of partnerships of low-rise development. Today's cottage settlements are a movement in the other direction.
3. Formation for premises owners in a multi-family building of incentives to conserve and to increase the value of their property in the mentioned building, including by ensuring its proper maintenance and timely overhaul and modernization. Incentives? What is that about? Of course not on the campaign "Let's save and improve." In order to stimulate it is needed to give something. Additionally. What will be given? Who will give? What for will they give? For right solutions of active and conscious owners. It is necessary to think over the rest. There are many options. I find it extremely important to resolve the task of formation of responsible and active premises owners in multi-family buildings. I do not put high hopes on the fact that its solution will be ensured through sensitization campaign on increasing the awareness of owners of multi-family buildings about their rights and responsibilities. I think the coverage will be small. Though such measures, in particular, the School of literate consumers, are useful. More important is to simplify the coordination of actions of active owners in the buildings due to the expansion of forms of holding general meetings of premises owners in multi-family buildings. Even not forms but a radical legislative simplification of the procedures of convocation, holding and execution of resolutions of general meetings of premises owners in a multi-family building. Legalization of the form of general meeting in person and in absentia cannot be considered to be radical measures. Let us ask ourselves a question if any owner can organize and hold a general meeting today on the current issue. How do they notify all the rest? What happens if they notify just a half and will just not be able to notify the second half? How will they determine the shares owned by each owner? After all, they will need to determine whether there is a quorum and calculate if there is the required majority of votes on the agenda. How do they prepare resolutions forms for voting? How do they execute the minutes and post it along with the ballot papers (resolutions) on the site of the State Information System of Housing and Public Utilities? How much time, efforts and nerves will they spend? How many errors will be committed? Will such a meeting be assessed as legitimate? After all, there are many rules and they are strict. And are there many of them who still decide to hold a general meeting? It is necessary to create such conditions and rules so as any owner could hold a meeting. And could not spend their vacations for this purpose. Without this we can constantly talk of activity. It's not that the owners are inactive. The thing is that today it is practically impossible for a simple owner to hold the meeting.
The Strategy states that there will be developed and adopted the procedure of public control in the housing sector, providing mechanisms, forms, methods of control (including with representatives of councils of multi-family buildings, condominium partnerships, housing associations), as well as the rules of direction and review by public authorities, local self-governing authorities, state and municipal organizations, other bodies and organizations which perform individual public authorities in accordance with the federal laws, requests of public control entities in the housing sector. This is very true. And here, it seems to me, I must say that public control is not only a system of vertical structures of "Housing and Public Utilities Control". The provision of the Housing Code of the Russian Federation on that councils of multi-family buildings shall have an opportunity to participate in public control (part 8 of Article 20) has not been implemented. And the procedures of responses to such inquiries should be such so as the senior officials could understand that it’s not them who are in chief in housing and public utilities, but the citizens who pay salaries to them.
I believe that "the work on formation of municipal offices of regional centers of public control" is setting the task "upside down". On the contrary, it is necessary first to build the work below, on the ground, in cities and settlements and only then to form the collegial bodies of public control at the regional level. And with elections, rotation, and not at the expense of drawing up lists of activists under the principle of "adequacy", devotion, loyalty, manageability as this is often done today. Also it is necessary to form federal bodies of public control by delegating. And there shall not be assumed that by creating NP "Housing and Public Utilities Control" the federal level of public control is filled. No one gave powers to the founders from somewhere below. Yes, it was discussed with the staff and approved from above. But there is no public mandate.
It will yet be necessary to speak up on many provisions of the Strategy. This is the first assessment. It is necessary to talk separately about the bill, the transition to direct contracts, the correlation of the status of management organizations and resources supply organization, the approaches to resettlement from hazardous dwelling, the change in the regulation of overhaul of the common property in multi-family buildings. Of course, the debate about the content of the Strategy was not sufficiently systematized, account of divergent proposals was made in secret, without the open multiple discussion of all "for" and "against." It is late now. But this does not mean that the discussion is ended. It is necessary to continue to discuss many approaches. The strategy does not draw the lines.
